The emphasis dedicated by Commissioner Kroes to the adoption of the draft regulation (the good news) reflects also the intent to minimize the media impact of the Berec’s opinion (the bad news). With regard to the latter, Berec is rejecting the substance of the Commission’s proposal, while sharing in a diplomatic ways the objectives of the Kroes’ reform. The national regulators refuse to follow the Commission’s diktat as how to regulate telecom networks (with regard to pricing and non-discrimination) and invoke their autonomy in deciding how to address specific national cases (while the Kroes’ proposal was quite prescriptive and rigide as to which remedy to apply).

Now, it is interesting to see what will happen next: it is difficult to believe that the Commission will completely disregard the Berec’s (non-binding) opinion, since a fair cooperation between the 2 bodies is necessary to guarantee the good functioning of the framework. Commissioner Kroes has now to return to her people and verify whether there is the possibility to adapt the current draft of the recommendation to the Berec’s wishes. Not an easy job, however, because Berec’s requests substantially water down the entire Kroes’ reform, therefore margins of manouver are limited.

The bitterness of the Berec’s move is somehow compensated by the success represented by the other event of the day, i.e. the proposed regulation on reduction of installation costs of high-speed networks. This is quite an important step for the development of fibers networks in Europe, because it introduces some important innovations that, depending on the country affected, may change dramatically the way to lay down new infrastructures: public utilities such as energy, gas, water, airports, harbours, waste recycling, public lighting ecc, will be obliged to give access to their infrastructures (cabinets, ducts, towers) no operators intending to use them to deploy fibres networks. To time, this was possible only on commercial basis (and in fact in some countries such option never worked effectively), in the future will be obligatory and, in case of unjustified refusal, the national regulator will be entitled to intervene and fix modalities and price of access.

In addition, the proposed regulation aims at simplifiyng the administrative processes by introducing unified point of contacts and, in particular, by setting the maximum term of 6 months for granting or refusing authorizations or permits.

The European Council, which met in Brussels in March 14-15, finally acknowledged, upon request of the European Commission, the question about need for more integration for the telecom single market:

“Digital Agenda and other services (October 2013): the European Council notes the Commission’s intention to report well before October on the state of play and the remaining obstacles to be tackled so as to ensure the completion of a fully functioning Digital Single Market by 2015, as well as concrete measures to establish the single market in Information and Communications Technology as early as possible;”

Thus, the European Commission, under the initiative of Neelie Kroes, responsabile for the Digital Agenda, is now going to prepare a strategic position, maybe a communication, to be presented to and approved by the European Telecom Council in October 2013. However, concrete information about specific measures to be taken are scarce.

It is interesting to see that many voices are advocating for a major integration of the European telecom market, however with different scopes and interests to pursue. It is not a misunderstatanding: in the reality, everyone is aware that the consolidation projects are different and may serve different scopes, but is confident that the result will be diverted towards the preferred scenario.

The incumbents, i.e. the former monopolist running the legacy infrastructures (Orange, Telecom Italia ecc.) are advocating for more national consolidation. They believe that operators in Europe are too many, and this number should be reduced via national mergers. According to ETNO, such national consolidation should free resources for the investments.

Such position is not shared Almunia, the European Commissioner for competition, according to which a simple merging process at national level would be detrimental for competition (and in fact he announced that antitrust authorizations will not be lifted, as it happened in Austria and Holland). The consolidation should happen instead at cross-border level, i.e., by allowing incumbents or other operators to buy telcos abroad and compete against other incumbents (as it rarely happens now in the fixed sector: there are few cases in the Nordic countries, and also Orange in Slovakia and Telefonica in Germany).

In other words, we are facing 2 different philosophies of consolidation: (i) the incumbents operators wishing a European (fixed) market of few big operators situated in different geographich areas and possibly non competing againts each other: Orange in France and Poland; Deutsche Telekom in Germany, Slovakia, Hungary, Greece, Romania and Croatia; Telefonica in Spain and Czech; and so on; (ii) Almunia recommending that consolidated operators should be competing against each other in all markets, as it happens sometimes in the mobile sector already now.

In this respect, the position of Commissioner Kroes is not sufficiently clear yet. She has been frequenlty advocating for consolidation, presenting the example of China and US having few national operators. However, she never apparently considered that the difference between Europe and other areas lies in the number of telecoms markets: Europe has to deal with 27 national markets, US and China with only one each: the difference in the number of operators is there. Kroes she never clearly remarked the difference between national and cross-border consolidation processes, unlike Almunia. Therefore, a clarification from the Dutch commissioner, also with respect to the view of Almunia, is due to come in the next weeks.

The telecom market integration strategy, expected by October 2103, will be therefore a good basis to finally understands whether the European Commission intends to strenghten competition and enhance genuine integration in the European telecom market, or just to empower incumbents operators to bring the national markets back to monopolies.

Berec, the European agency of communications regulators, today announced its intention to delay the adoption of an opinion on the proposal of Commissioner Kroes to strongly reform European network access regulation (via a well-known proposal of recommmendation). After 2 days of Conclave in Slovenia, the national regulators only found an agreement about an executory summary and then postponed the adoption of the final opinion by 2 weeks. A press release was published only today.

Commissione Kroes also published a statement, thanking Berec for the “positive opinion” (although no opinion has been drafted yet!).

It is not a surprise that Berec is supporting the general principles pursued by Commissioner Kroes with her proposed recommendation, because such objectives are non-controversial and are part of the acquis communautaire: enhancing of broadband investment environment across Europe, continuing to promote competition, ensuring a transparent, predictable, and stable regulatory environment in support of the roll out of NGA networks. No doubt that Berec and everybody in the market agrees on this.

However, beside such (non controversial) objectives, the innovative part of the Kroes recommendation lies in details which are susceptible to dramatically alter the current regulatory framework (enacted in 2009 with Commissioner Reding). In this respect, the press release suggests that Berec is seeking important changes to the draft recommendation in several and substantial areas, such as the outcome of the proportionality test in the matter of non-discrimination; the conditions for removal of cost-orientation; the principles of the proposed margin squeeze test and the cost modelling approach put forward by the Commission.

With regard to the most controversial part of the proposed recommendation, namely the proposal to “freeze” (save indexation) the price of access to traditional telephony networks (copper legacy networks), Berec clearly intends to defend the discretionary powers of its members:

“BEREC supports the Commission’s aim of achieving predictable and stable copper prices in line with the principle of cost orientation, which will help encourage efficient investment in NGA and provide a competitive safeguard to third-party access seekers. BEREC and the Commission agree that the modelling approach used by an NRA should reflect, among other things, the network architecture being pursued, which in turn would generate prices that reflect the actual costs faced by operators in each market”.

TRANSLATION: “Dear Commissioner, no way that you impose us to set the same price from Lisbon to Bucarest, passing by Bonn and Palermo. The copper access prices should reflect national market and competition conditions (network architetture, costs ecc) and therefore we can’t accept a Eurotariff. This is not roaming!”.

That’s the situation. European Commission and Berec have officially shaken their hands, taken a beautiful family picture and shown to be happy in front of the cameras. However, it is likely that the final outcome of this story (i.e. the final opinion of Berec) will be a bit less positive than Commissioner Kroes intends, and the national regulators may pretend substantial changes. Kroes seems to be ready for some concessions but, firstly, she expects a generic supports from Berec in the official venues. Berec prefers to avoid open conflicts also because the positions amongst members are diffentiated. Therefore, a peaceful official picture is in the interest of everybody. However, the agreement on the Kroes’s proposal (meaning the substantial details, not the incontroversial generic principles) is still to come.